Noble Group jettisons one of its 'crown jewels' to raise funds

[SINGAPORE] Noble Group executives mapped out a long road to recovery for the battered commodity trader as shareholders voted to approve the sale of a US energy unit to raise funds, with chairman Richard Elman describing the asset being sold as one of the company's crown jewels.

The company hopes to be profitable as it was in the past in the next one or two years, Mr Elman told a special general meeting in Singapore on Thursday before shareholders voted in favour of the sale of Noble Americas Energy Solutions, or NAES.

Co-chief executive officer Will Randall said that the business being sold become non-core after Noble Group lost its investment-grade rating.

Noble Group has been divesting assets and cutting costs to bolster its balance sheet and restore investors' faith in the business after the share price collapsed, it swung to a full-year loss and had its credit ratings downgraded to junk.

The company said in a presentation that the sale of NAES, which was announced last month, largely caps a drive to raise US$2 billion. The business was previously described by former CEO Yusuf Alireza as a core holding.

"It's not the only crown jewel, it's one of the jewels we have," Mr Elman said, referring to NAES. The decision to sell the business "was taken because of market conditions which not only affected Noble, but affected everyone in the commodity business."

CALPINE BUYS

The unit will be sold to Houston-based Calpine Corp for US$800 million plus the repayment of working capital, which Noble Group has estimated to be an additional US$248 million. The move follows a rights issue that raised about US$500 million as well as the sale last year of the remainder of its agri business.

With the capital-raising initiatives, including the NAES disposal and rights issue, "we'll have more than enough liquidity to cover the upcoming maturities," chief financial officer Paul Jackaman told the meeting.

Noble Group had short-term debt of about US$2.3 billion as of June 30, compared with liquidity sources of US$2.5 billion, according to the presentation.

"When we lost the investment grade, this went from core to non-core," said Mr Randall, who runs the company with co-CEO Jeff Frase. "We're trying to right-size Noble and get Noble prepared to move into the markets, which we expect to stay a certain way for many years."

BLOOMBERG